My Recommended Reading List For Investing

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While there is a ton of great financial information on the internet, I still think the best way for a beginner to learn how to invest is to read a book. It’s by far the most efficient way to understand all the history and research behind why people like me promote low-cost index fund investing. The more you know, the less you’ll be tempted to pay high fees or chase hot stocks.

By my count, I have read and reviewed 24 financial books so far. Here are my picks. They would make a great gift or simply provide some useful reading during holiday downtime. I own all of these books, and they were some of the best money I’ve ever spent.

There are a lot of great books in this arena, these are just my personal favorites. Read the reviews on Amazon (and maybe use your free Prime membership). Be sure to look on Half.com, Overstock.com, or Froogle to get a better price (take into account shipping), or check them out from your local library.

I also recently ran across another reading list at AltruistFA.com, which has expanded my own To-Read list further.

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I read The Four Pillars because of your review, and I thought it was excellent! I’ve taken a lot of simple modeling techniques explained in that book to heart (prepping my own retirement, etc.). I am still interested in The Intelligent Asset Allocator too… but I think you said you can get most of what you need from the FOur Pillars, right?

That being said, I really want to read A Random Walk because its a classic (and for good reasons). Where does John Bogle’f first book (I forget the name) where he introduces index funds fall on your chart?

I might need to check out this Babylon book too, since you haven’t led me a stray yet!

You have to check out “Transforming Debt Into Wealth” by John M. Cummuta. It ‘s not actually a book but vhs. I don’t really see how it turns debt into wealth, but it has a system for getting out of debt very very rapidly. Try to get it cheap though. It goes for over $100 on eBay, but I was lucky enough to get it for a couple bucks at the Salvation Army. Try not to pay more then $20 for it.

“The Richest Man in Babylon” is a great book for anyone to read. It is a very easy read. The “Four Pillars of Investing” is also an excellent read. I have yet to read the third book, but I am putting it on my wish list now.

The Four Pillars of Investing would be my choice if I could own only one book on investing. It is more than just a book to read to gather a few ideas–it is literally a reference you may read many times. Rarely does a week pass when I don’t open this book again to check on something and invariably another bookmark is added. (I now have over fifty bookmarks which enable me to recheck key passages.)

The Only Investment Guide You’ll Ever Need by Andres Tobias is one of the classics. On Tobias’ website, he links to a site (the only one he links to, BTW) by Less Antman, whose long-term asset allocation strategy is 50% domestic stocks and 50% foreign. You won’t find this in many investment books because owning large amounts of foreign stock wasn’t common until recent years.

Among softer titles, I liked All Your Worth by Tyogi and Warren. They suggest dividing your income into Must-Haves, Savings and Wants. A couple of simple principals are that anything that isn’t a must-have shouldn’t be a must-pay, so it’s OK to have a mortgage (you must have housing) but not a non-cancellable gym membership. But nothing is a must-pay if you can get rid of the debt and the payment simultaneously (e.g. you can get rid of the car payment by selling the car).

How would you compare “The Four Pillars of Investing” to Bernstein’s “The Investors Manifesto”? I am not totally sold on the idea of index investing being the best way to invest, but it sure would be easier than picking individual investments. I suppose that is what Bernstein and many others are trying to tell me.

These are excellent choices. What’s interesting is that your top two choices don’t really go into any technical depth when it comes to building wealth or investing – they are more high level and philosophical in nature. These books almost tell you what not to do and how not to think. This is key – investors are too often overconfident, greedy, or naive and they end up not beating the market over the long term because of it. Simplicity and disciple is really the best option for the vast majority of retail investors out there.

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